April 2012

The year of the Dragon has definitely spurred more buying activities compared to last year. More investors are getting off the fence and feeling a little bit more confident. Every now and then, I will come across some first time investors interested in the Seattle condo market. If you are one of those first time investors who plan to buy and rent it out, there are a couple of things that you might want to consider before venturing out on your first condo search:

Consult your financial planner (If you have one): How is the rental property going to fit into your whole investment portfolio? Is it going to be long or short term? These questions may have impact on your investment goals whether you're are looking at medium term capital appreciation or as part of your long term portfolio.-

Consult your tax account- In most cases, there are some tax benefits when you own an investment property. You could deduct your mortgage interest, taxes, insurance, and expenses associated with owning the rental property. If you are experiencing rental loss, you might even be able to write that off but they are subject to some income limitations. So, talk to your tax account to find out if you're eligible for those tax benefits.-

Get pre-approved! Unlike during the condo boom years when you can easily get a pre-approval letter within hours after giving out some basis information over the phone, these days, it takes a little bit more work. Lenders are much more stringent about giving a pre-approval letter. Besides running a credit check, most lenders may need you to provide your pay stub, W2, and bank account statements. Depending on your individual circumstance, (employed, self employed,etc.) the documents required may also vary with different lenders.-

Are you ready to be a landlord? Are you going to manage the rental property or have someone do it for you? If you are newbies, you may feel excited with your first investment and wanted to manage it yourself. There's paperwork, time and energy needed to manage a rental property. So, if this is something you don't feel up for, you might want to hire a management company to deal with it.-

Run all your numbers. After getting pre-approved and narrowing down the price range that you're comfortable with, run the numbers. This is where an experienced realtor can come in and help you figure out the high level calcs. The costs for buying and selling the rental property, the rental rates, vacancy rates, maintenance/repair costs, cost of hiring a management company and other expenses associated with owning an investment condo should all be considered.-

Be open minded. I once had a client who thought distressed properties are usually not in good condition and did not even want to consider looking at them. However, majority of the condos that I have come across are usually in pretty good shape or only require minimal work to make it rentable. Since this is an investment property, be open minded about looking at distressed properties (short sales and bank owned). After all, these properties are generally priced 5-20% below market value which will give you a good start and more head room for appreciation down the road.

By Wendy Leung with Seattle Condo Review. A guide to Seattle condos exclusively for buyers and sellers.

Not that it's so hard to be more popular than politicians but our fair city was recently ranked the most favorably viewed city in America!

In theory, this should mean people will continue to want to move here from California and the East Coast for many years to come.

Coming in #1, Seattle had 57% of Americans polled saying they had a favorable opinion of the Emerald City (only 14% were unfavorable). Coming in second was the other Northwest city, Portland, with 52% favorable. San Francisco came in the middle of the pack with 48% favorable and 29% unfavorable. The bottom: Detroit, Oakland, and LA.

By quite a large margin, our recent poll of the most timeless Seattle condo came in with resounding results -- didn't even need a runoff. 1521 came in numero uno with 52% of 100 votes followed by Escala at at 15% and Harvard & Highland at 10%.

Congrats to the creators of 1521! Years ago, a lot of folks were skeptical of the project partly due to the surrounding clientele (especially the needle exchange office which I believe has since been relocated) but over the years, 1521 has stood head and shoulders above all the other projects and still looks fresh and visionary even after the initial gala champagne bottles have long been put away and recycled.

By Wendy Leung with Seattle Condo Review. A guide to Seattle condos exclusively for buyers and sellers.

Folks the March numbers are in and I've assembled a whole slew of charts and tables for your pleasure. For those of you who aren't into curling up with a hot cup of coffee and staring at numbers, here are 4 highlights.

1. Even though there was 40% less inventory this March versus last March, there was about the same number of actual condos sold.

2. Number of units sold was up over 20% in March 2012 compared to Feb 2012. First time we saw that big of a month over month improvement in a long time.

3. March 2012 median prices were up 15% versus February 2012. First time we've seen a month over month increase in median prices since November 2011!

4. Prices are still soft compared to last year and there isn't any neighborhood where prices are higher in 2012 than they were in 2011 and while Belltown/Downtown is holding up well versus last year, even that neighborhood is still about 10% off of 2012 prices.

Remember when there were new condos sprouting out of the ground all the time and the city was littered with shrimp cocktail launch events around award-winning diaromas? Good times.

It's interesting to take a look back at some of the hotter projects after the initial shine has worn off and see which ones still hold the interest and cachet now that they're not brand new. I'm curious which projects you think have held up well from a design and desire point of view. Five years from now, which of the following projects do you think will be our equivalent of the classic black dress: always in style, desirable, and on the A list?

Last week I asked for readers' questions and got a few great ones so I'll take on one of them here. SCR reader Darrel asks:

A lot of big projects were cancelled or put on hold. AVA, Insignia, Heron and Pagoda, 1 hotel, etc. Inventory is steadily dropping as the last units from Escala, Olive 8 and 1521 are selling out. With an increase in demand for Downtown and Belltown condos in the coming months possibly driving up prices, will this motivate developers to build more? Or do you think they will stick with apartments for now like Vulcan is doing?

Obviously, only time will tell and I'll be the first to admit if I could predict the markets, I'd be on Wall Street (the one in NYC). I'm sure other readers will have different points of view so feel free to sound off in the comments section below. That said, here are my observations.

Moreover, since many owners are waiting for the market to improve (there are fewer units on the market than normal), there is probably fairly liquid supply lying in wait should things improve. -

In summary, I don't expect to see many new condos breaking ground in the near future. We'll probably start with investment units currently being rented out, then perhaps some apartment conversions, followed by a few brave developers down the road.

That's my 2 cents. Curious to see what others think as well!

By Wendy Leung with Seattle Condo Review. A guide to Seattle condos exclusively for buyers and sellers.

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About the Authors

Marco Kronen is the co-author and a condo Realtor. He and Wendy have worked together serving clients in Seattle since 2007. Feel free to contact Marco here.
Wendy Leung is the founding editor of the Seattle Condo Review. She's also a full-service Seattle realtor.